Wal-Mart buys storage Sharks from IBM

Wal-Mart Stores Inc. says it will install storage servers from IBM Corp. to form the backbone of the retail giant’s multimillion-dollar mainframe consolidation and storage initiative.

The project, which industry experts estimate will cost US$30 million to $50 million, will use IBM’s newest z900 mainframes and Enterprise Storage Servers – nicknamed “Sharks” – to handle data-processing, reconciliation, debit and credit transactions, as well as product replenishment tasks for Wal-Mart’s 4000-plus stores – 177 of which are in Canada.

“The IBM Shark and eServer z900 have given us a significant improvement in our processing time, in some cases allowing us to cut our processing time for some jobs by more than half,” said Dan Phillips, vice-president of technology support and operations at Wal-Mart.

The Shark’s upgradability for performance and capacity was also an important part of Wal-Mart’s decision to replace its existing EMC Corp. storage solution with Big Blue’s technology, said Bob Samson an Albany, N.Y. based IBM vice-president of sales.

“The origins of this (deal) go back a number of years. IBM invented the storage business 30, 40 years ago and for many, many years we were the dominant players, but we made a few bad decisions along the way – we didn’t have the right products at the right time – and we lost a lot of that market presence, predominantly to EMC.

“It’s a large deal for IBM, and in a negative way it’s a large deal for EMC,” Samson said. He also characterized this contract as IBM’s biggest win on the storage comeback trail it has been following for the last few years.

Analysts agree that this contract comes at a time of extraordinarily fierce competition between IBM and storage competitors EMC, Hitachi Data Systems Corp. and Sun Microsystems Inc. It is also a turnaround of sorts for IBM’s Shark Enterprise Storage Server, which until recently had performance problems, said Arun Taneja, an analyst at The Enterprise Storage Group Inc. in Milford, Mass.

“Early information we were getting from the field was that Shark’s performance was horrible and it couldn’t grow capacity beyond a certain point,” he said. Those problems have apparently been ironed out, Taneja said.

Mike Kahn, chairman of The Clipper Group Inc. in Wellesley, Mass., said the Wal-Mart contract significantly turns up the heat on storage market leader EMC. “Pricing has got to be an issue. Whenever you’re spending this much money, you’re always looking for the best price available,” Kahn said.

“IBM and Hitachi in particular are fighting back very hard,” Taneja said. “Our information is that EMC is selling products at a price-per-gigabyte rate that is almost unheard of for the class of systems they are.”

According to IBM’s Samson, the overall storage business in Canada is very analogous to what’s happening around the world.

“EMC has been the dominant leader for a number of years, and we’re having a gritty comeback in storage. We’ve had a number of Canadian wins where we’ve replaced EMC . . . the Wal-Mart example is just an incredibly large example of what’s happening,” Samson said.

Sun announced today that it too had landed a contract with another retailer, Ross Stores Inc. The Newark, Calif.-based company, which operates 438 retail outlets, will use Sun Fire 6800 servers to manage corporate accounts, supplies and human resources.

– with files from Lucas Mearian of IDG News Service

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